With the New York State budget deadline of April 1 fast approaching, the Assembly, Senate, and the Governor are now actively negotiating to adopt the budget on time. Despite the Governor’s Fix NYC Advisory Panel proposing a congestion pricing plan in January, Governor Cuomo never actually submitted legislation, either as part of the budget or in the ensuing months, to implement the main proposal, to charge private vehicles entering a Manhattan business district zone.

The Assembly did advance a major funding proposal for the MTA. Its one-House proposal included $488 million in new funds for the MTA, divided between a small surcharge on for-hire( cabs, Uber,etc.) vehicle trips in the metro region, with a larger surcharge for trips south of 96th street in Manhattan. It also proposed an additional levy on real estate transactions of more than $5 million. The Assembly proposal is similar to a part of the Fix NYC report that advocated a for-hire vehicle surcharge. The new money would be sufficient to fund the Subway Action Plan developed by MTA Chair Joe Llota last summer to add mostly maintenance improvements to cut delays and breakdowns in the subway system. The Assembly rejected several of the Governor’s proposals to force New York City to pay more to the MTA. The rejected budget bills include requiring the City to pay the entire New York City Transit Capital Plan( $17 billion over 5 years), giving the MTA unilateral authority over determining how much of the City’s property tax revenue to take for transit projects that add real estate value, and forcing the City to pay half the cost of the Subway Action Plan.

The State Senate proposed no new funding at all for the MTA in its one-House budget. Instead, it rejected the Governor’s revenue proposals, intended to balance the budget, and actually threw $750 million more in tax cuts on the table for the short term. For the long-term the Senate proposed removing senior citizens from having to pay property taxes at the end of ten years. While the Senate offered little specifics on this idea, a plan of this nature would likely cost school districts and local governments at least $4 billion a year when fully implemented. The State would either have to make up the difference or the schools and local communities would lose the money or raise taxes on everybody else. Where the State would get this extra revenue is not clear. The Senate proposal is on top of a plan advanced by the Senate to cut income taxes by $4 billion a year by 2025, which was adopted by the Legislature just two years ago and is being phased in.

Earlier this month Standard & Poor downgraded the MTA’s bond rating one notch, to A-plus, and issued a negative outlook for the agency. This action was likely related to a Feb.25 quarterly budget update to the MTA Board. This report stated that the MTA would face a $400 million deficit in 2020, and $600 million by 2021, notwithstanding fare and toll hikes in 2019 and 2021. The main cause of the deficits was reported to be declines in real estate transaction revenues like the mortgage recording tax, a part of which is dedicated to the MTA within the region.

Left unsaid in the bond rating downgrade and the MTA deficits is the impact on the agency’s capacity to borrow funds to meet its commitments to the 2015-19 Capital Plan. Those commitments are scheduled to be $13 billion of the $32 billion adopted in 2016-17. A $600 million shortfall in available cash flow could translate into an inability to sustain, or borrow, about $9 billion of its $13 billion commitment.

Adoption of the funding plan advanced by the Assembly would help mass transit in a meaningful way, funding both maintenance improvements and some essential capital improvements like signals. These funds still do not address long-term issues like the 2020-2024 Capital plan or shortfalls in the current 2015 plan that seem likely to materialize, but would be a big step in the right direction. We will know the outcome of the budget shortly and can take stock of the next steps needed to address deepening challenges for the mass transit system.